Weyerhaueser Financial Investments is preparing to sell its landmark Atria West office buildings on Santa Monica Boulevard in West L.A., confirmed Joe Hemmens, an official at Weyerhaueser's Oxnard office.
Westside real estate sources said the twin buildings, which together have 171,000 square feet of class-A office space and are fully leased, are likely to fetch between $25 million and $30 million, or $150 to $175 per foot.
"It should fetch a price (in that range) largely because it's on a long-term ground lease," said Scott Katcher, managing director at brokerage firm Julien J. Studley Inc.
Katcher said that, because Weyerhaueser has a ground leasehold, the sales price for Atria West would likely end up being $100 to $125 per foot less than the amount it would fetch if Weyerhaueser owned the underlying dirt outright.
Weyerhaueser Financial, a division of Tacoma, Wash.-based forest-products company Weyerhaeuser Co., built the twin three-story buildings at 10585 and 10635 Santa Monica Blvd. in 1989, just in time for the region's real estate swoon.
In time, Weyerhaueser landed two major tenants, Warner/Chappell Music Inc. and Rhino Entertainment, which now occupy 60 percent of the complex. Overall, the complex includes the two Atria West buildings and a group of smaller, historic structures at 10669-10683 Santa Monica Blvd., known collectively as The Grove. The Grove is populated by retail and office operations.
Katcher said The Grove will be an attractive feature to prospective buyers.
"It's a great amenity," he said. "They're architecturally unique in a neat environment. There's income from The Grove."
Hemmens said that Weyerhaeuser Financial is working out a contract with Jones Lang LaSalle to market the property. He declined further comment because he said it is too early in the process to discuss.
Officials at Jones Lang LaSalle declined comment.
While the Atria West buildings are fully occupied and are located in the still-hot Westside market, some industry observers familiar with the buildings said any deal would likely come with some complications.
For starters, the ground lease situation. The complex sits atop three parcels that are subject to ground leases from two separate owners: the family that started a construction division of Weyerhaeuser (which owns two of the parcels) and an unidentified private individual. The sources said that, while common on the Westside, ground leases can hold up financing and some investors simply refuse to buy a building with a ground lease.
Bob Safai, a principal with Westside real estate services company Madison Partners, said it is premature to talk about who might be interested in the buildings or how much they might pay.
"I think a lot of players will come out to take a look at it because it's a quality asset, but some players might shy away because of the ground leases," Safai said.
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